Everyone wants to know Abbott’s economics

Tony Abbott
returned from a week at the beach and immediately noted that nothing had changed in Canberra.

There was still an incompetent government in office, led by a dishonest Prime Minister, Abbott said in his first post-holiday media conference.

His solution? The same one he proposed all of last year.

“The one way to restore honest government to this country, the one way to restore political integrity, is to have an election and let the people pass judgment on this fundamentally incompetent and untrustworthy government," the Opposition Leader said.

So one thing was immediately clear about the year ahead in federal politics: Abbott will be sticking with the political formula which served him so well last year.

Throughout 2011, he did what he promised he would do when he replaced
Malcolm Turnbull
as Liberal Party leader – he ferociously opposed the Gillard government and, in doing so, made the government, its policies and its performance the issues that dominated the political debate.

With the Coalition internally disciplined in a way it had not been since its defeat at the 2007 election, and Abbott therefore not having to be constantly looking over his shoulder to deal with leadership rivals, he had a luxury not often enjoyed by an opposition leader – a lack of intense scrutiny.

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More than two years after he was elected to the Liberal leadership, Abbott remains pretty much a policy-detail-free zone.

His policy agenda has been outlined only in the broadest of terms and, in core areas such as the touchstone issue of industrial relations, is so vague it is impossible to say with any precision what he would do if he became prime minister.

The specific items on Abbott’s policy agenda are the Gillard government policies he opposes, not original ideas of his own.

Abbott’s leadership is defined by saying no.

This has given Gillard and the Labor Party a very small target to counter-attack. And it has precious little to show for its charge that Abbott is Mr Negativity, without ideas and with no plan for government.

For all its efforts to discredit Abbott, Labor has failed dismally to cut back the Coalition’s election-winning lead in the polls.

Labor’s primary vote has been stuck at potentially disastrous lows for months, with worryingly little sign of rising to levels that would encourage Labor supporters to believe that the government can avoid a wipe-out at the next election.

Abbott may have paid a price by allowing voters to know him only by what he opposes – his personal approval ratings are below what you would normally expect of a leader whose party holds such a dominant position. But why would he worry about that when he is so clearly on course to become prime minister?

The electorate is obviously making its judgments based on its dislike of
Julia Gillard
rather than on any doubts it has about Abbott.

But although voters appear – at this stage of the political cycle at least – not to be too fussed about what might be Abbott’s personal policy agenda and what sort of government he might bring, there are constituencies that want to know the answers to these questions sooner rather than later.

Business also wants to know what Abbott’s plans are. And the media wants to expose his policy agenda.

But there is another group, barely visible publicly but increasingly anxious to know what an Abbott government would be like. This is the group whose members see themselves as the guardians of the modern Liberal Party’s economic philosophy.

There are occasional public hints of it but behind the closed doors of internal Liberal Party conversation, there is a deepening anxiety about where Abbott might take the party on economic policy.

To understand the depth of this concern you need to look back at the recent history of the party. Only three decades ago there was a raging philosophical and policy battle among Liberals about the party’s future.

Until the defeat of the Malcolm Fraser government by the Bob Hawke-led Labor Party in 1983, Coalition economic policies were a pragmatic blend of the economic nationalism of the Country Party, the self-interested protectionist influence of key sections of the business community, and the paternalistic instincts of postwar conservatism.

It was only in the later stages of the
Fraser
government that the advocates of free-market economic liberalism began to mobilise inside the Liberal Party. In the wake of the
Hawke
-
Keating
economic reform era and the mobilisation behind
John Howard
’s leadership of the so-called dries, it seemed that the Liberal Party’s economic heart had been permanently captured by the philosophy of free-market capitalism. But now it’s not so clear that this was a permanent change.

There is growing concern in Liberal Party ranks – including among some in Abbott’s parliamentary team – that his instincts on economic policy are more those of the Fraser era than the Howard era.

One of the developments that alarms the keepers of the free-market faith is the revival in the Nationals of old Country Party-style economic nationalism, most obviously and loudly represented by Queensland senator
Barnaby Joyce
. Joyce is one of Abbott’s closest confidants.

In a number of internal debates, Abbott has made it clear that he sees party philosophy as providing guiding principles for policies but that he won’t be bound by ideology where there is likely to be a heavy political cost.

He is fundamentally guided by pragmatism, even when it comes to his own deeply held personal beliefs stemming from his Christian faith.

It is no coincidence that in the middle of last year the so-called Society of Modest Members – which was created in the latter years of the Fraser government as a ginger group in support of free-market ideas – was resurrected in the parliamentary Liberal Party.

Although its members insist this was in response to the “economic illiteracy" of the Rudd and Gillard governments, its symbolic significance inside the Liberal Party is inescapable.

Long-time friend and political associate, former federal treasurer
Peter Costello
– who was sometimes frustrated in government by what he felt was John Howard’s straying from free-market principles for the sake of political pragmatism – is a patron of the revived Society of Modest Members, along with former senator and senior Abbott-team member
Nick Minchin
.

Costello has publicly noted the high profile Abbott has given Joyce and, in the same newspaper article, also noted that Abbott had once worked closely with the old Democratic Labor Party, which had similar pro-protectionist and economic regulation views to those Joyce is now promoting.

Although Costello advised Abbott not to be provoked into revealing too much policy detail too far before the next election, his commentary clearly pointed to the risk of an Abbott government regressing to old, outdated economic ideas.

And although Abbott clearly intends to keep his detailed policies camouflaged for as long as possible, there are already some issues that provide pointers to the direction that he will take on economic policy.

Abbott says he believes in the importance of maintaining a strong manufacturing sector and has even backed stronger anti-dumping protection, which risks breaching World Trade Organisation rules.

Decisions need to be made soon about policies for the Australian car industry beyond 2015. All signs are that Abbott will support continuing government support for the industry, given his view that maintaining a heavy-industry manufacturing sector is a strategic imperative.

Pressure is building on – and within – the Coalition for tougher foreign investment rules to restrict Chinese ownership of Australian farm land.

The dries are looking to Abbott to resist calls from farmers – backed by the Nationals – for a much lower threshold for foreign investment proposals in agricultural industries to require official approval.

An Abbott cave-in to these demands would increase the anxiety of the dries.

Abbott is strongly critical of the Gillard government’s fiscal profligacy and gives the impression that an Abbott government would follow the example of its British conservative counterpart and make savage cuts to restore the budget to surplus and slash debt.

But he has yet to spell out a credible strategy for achieving this.

There is no philosophical line through these matters. Taken together they add up to just one word: pragmatism.

The Society of Modest Members disbanded not long after Howard became prime minister in 1996 because it saw no need to hold Howard to the faith. It seems unlikely to make the same decision if Tony Abbott becomes prime minister.